International Journal of Entrepreneurship and Small Business vol:11 issue:3 pages:242-262
International Journal of Entrepreneurship and Small Business
The limited amount of research on the relationship between the depth of the entrepreneur’s experience and firm growth shows inconsistent and inconclusive results. Therefore, the primary purpose of this paper is to examine this relationship in more detail. A comprehensive understanding of this matter is especially valuable in the context of family business successions, given that many companies seem to be unsuccessful in conquering the difficulties surrounding a succession. One of the explanations can be found in the fact that successors often lack experience when taking over the company. Based on a sample of 511 small family firms, our research results suggest a positive effect of experience on firm performance. In contract with prior results our results suggest a curvilinear relationship between CEO experience and performance. Experience is contributive to the growth in value added of a firm up to a certain number of years the CEO is in a CEO position as well as a certain number of years of employment in a firm of a dissimilar industry, after which it becomes counterproductive. In addition the results also show that firms with CEOs currently holding multiple directorships are found to generate significantly higher performance levels and that growth rates appear to lessen according to the age of the CEO. The results of this study have interesting implications for family business leaders planning the succession of the family firm.